Banknotes of the pound sterling
The pound sterling (symbol: £; ISO 4217 currency code: GBP) is the official currency of the United Kingdom, Jersey, Guernsey, the Isle of Man, British Antarctic Territory, South Georgia and the South Sandwich Islands, and Tristan da Cunha. Various banknotes are used within the United Kingdom. The Bank of England has a legal monopoly of banknote issuance in England and Wales, but not in S
Overview
The pound sterling (symbol: £; ISO 4217 currency code: GBP) is the official currency of the United Kingdom, Jersey, Guernsey, the Isle of Man, British Antarctic Territory, South Georgia and the South Sandwich Islands, and Tristan da Cunha. Various banknotes are used within the United Kingdom. The Bank of England has a legal monopoly of banknote issuance in England and Wales, but not in Scotland and Northern Ireland, where three banks in Scotland and three in Northern Ireland, issue their own banknotes as provisioned by the Banking Act 2009. However, the law requires that the issuing banks in Scotland and Northern Ireland hold a sum of Bank of England banknotes (or gold) equivalent to the total value of notes issued. Versions of the pound sterling issued by Crown Dependencies and other areas are regulated by their local governments and not by the Bank of England. Four British Overseas Territories (Gibraltar, Saint Helena, Ascension Island and the Falkland Islands) also have currencies called pounds which are at par with the pound sterling.
Currently circulating Bank of England notes
The pound sterling banknotes in current circulation consist of Series G Bank of England notes in denominations of £5, £10, £20 and £50. The obverse of these banknotes issued until 4 June 2024 feature the portrait of Elizabeth II originally introduced in 1990. Starting on 5 June 2024, the Bank of England began issuing notes featuring a portrait of Charles III, which will circulate alongside the Elizabeth II notes and gradually replace them. Select banks in Scotland and Northern Ireland also issue their own banknotes at par with Bank of England issues. Scottish and Northern Irish notes, which are not legal tender but are promissory notes, are occasionally rejected as payment in England by merchants unfamiliar with them, and are likely difficult or impossible to exchange outside Britain.
History
Until the middle of the 19th century, privately owned banks in Great Britain and Ireland were free to issue their own banknotes. Paper currency issued by a wide range of provincial and town banking companies in England, Wales, Scotland and Ireland circulated freely as a means of payment. As gold shortages affected the supply of money, note-issuing powers of the banks were gradually restricted by various acts of Parliament, until the Bank Charter Act 1844 gave exclusive note-issuing powers to the central Bank of England. Under the act, no new banks could start issuing notes; and note-issuing banks gradually vanished through mergers and closures. The last private English banknotes were issued in 1921 by Fox, Fowler and Company, a Somerset bank. However, some of the monopoly provisions of the Bank Charter Act 1844 only applied to England and Wales. The Bank Notes (Scotland) Act 1845 was passed the following year, and to this day, three retail banks retain the right to issue their own sterling banknotes in Scotland, and four in Northern Ireland. Notes issued in excess of the value of notes outstanding in 1844 (1845 in Scotland) must be backed up by an equivalent value of Bank of England notes. Following the partition of Ireland, the Irish Free State created an Irish pound in 1928; the new currency was pegged to sterling until 1979. The issue of banknotes for the Irish pound fell under the authority of the Currency Commission of the Republic of Ireland, which set about replacing the private banknotes with a single Consolidated Banknote Issue in 1928. In 1928, the Currency and Bank Notes Act 1928 reduced the fiduciary limit for Irish-bank issued sterling banknotes circulating in Northern Ireland to take account of the reduced size of the territory concerned. Elizabeth II was not the first British monarch to have her face on UK banknotes. George II, George III and George IV appeared on early Royal Bank of Scotland notes and George V appeared on 10/– and £1 notes issued by the British Treasury between 1914 and 1928. However, prior to the issue of its Series C banknotes in 1960, Bank of England banknotes generally did not depict the monarch. Today, notes issued by Scottish and Northern Irish banks do not depict the monarch. The monarch is depicted on banknotes issued by the Crown dependencies and on some of those issued by overseas territories.
Everyday use and acceptance
The wide variety of sterling notes in circulation means that acceptance of different sterling banknotes varies. Their acceptance may depend on the experience and understanding of individual retailers, and it is important to understand the idea of "legal tender", which is often misunderstood (see section below). In summary, the various banknotes are used as follows:
Bank of England banknotes
Most sterling notes are issued by the Bank of England. These are legal tender in England and Wales. Bank of England notes are generally accepted in the Overseas Territories which are at parity with sterling. In Gibraltar, there are examples of pairs of automatic cash dispensers placed together, one stocked with Bank of England notes, and the other with local ones.
Scottish banknotes
Banknotes issued by Scottish banks are the recognised sterling currency in Scotland, although they are not legal tender (nor, in Scottish law, are Bank of England notes). They are always accepted by traders in Scotland, and are usually accepted elsewhere in the United Kingdom. However, some retailers outside Scotland may be unfamiliar with the notes and they are sometimes refused. Institutions such as clearing banks, building societies and the Post Office will readily accept Scottish bank notes. Branches of the Scottish note-issuing banks situated in England dispense Bank of England notes and are not permitted to dispense their own notes from those branches. Modern Scottish banknotes are denominated in sterling, and have exactly the same value as Bank of England notes; they should not be confused with the former pound Scots, a separate currency which was abolished in 1707.
Northern Irish banknotes
Banknotes issued by Northern Irish banks have the same legal status as Scottish banknotes in that they are promissory notes issued in pounds sterling and may be used for cash transactions anywhere in the United Kingdom. However, they are rarely seen outside of Northern Ireland. In England and Wales, although they might be accepted by any shop, they are often not accepted without explanation. Like Scottish notes, clearing banks and building societies will accept them. Northern Irish pound sterling banknotes should not be confused with the Irish pound (or punt), the former currency of the Republic of Ireland, which was replaced by the euro in 2002.
Banknotes of the Crown dependencies
The Bailiwicks of Jersey and Guernsey, and the Isle of Man, are possessions of the Crown but are outside the United Kingdom; they are in currency union with the United Kingdom and issue pound sterling banknotes in local designs (Jersey and Guernsey pounds are freely interchangeable within the Channel Islands). In the United Kingdom, they are intermittently accepted by merchants. However, they are accepted by banks and post offices and the holder can exchange these notes for other sterling banknotes. They also issue their own coinage.
British Overseas Territories
There are fourteen British Overseas Territories, many of which issue their own currencies which are distinct under ISO 4217: Gibraltar, the Falkland Islands, and St Helena, Ascension Island have their own pounds which are at par with sterling. These notes cannot be used in the UK or outside the territories of origin. Falkland Island pounds are also valid in South Georgia and the South Sandwich Islands and the British Antarctic Territory. Saint Helena pounds, however, cannot be used in the constituent territory of Tristan da Cunha, where sterling is the only official currency. The remaining British Overseas Territories use the Bermudian dollar, the Cayman Islands dollar, the Eastern Caribbean dollar, the Euro, the New Zealand dollar, or the United States dollar.
Legal tender
In the UK legal tender specifically relates to the settlement of debts: a debtor cannot successfully be sued for non-payment if they pay the exact amount into court in legal tender. Legal tender is solely for the guaranteed settlement of debts, and does not imply a right to pay with cash in other contexts. Banknotes do not have to be classed as legal tender to be acceptable for trade; millions of retail transactions are carried out each day in the UK using debit cards and credit cards, none of which is a payment using legal tender. Equally, traders may offer to accept payment in foreign currency, such as the euro, yen, or US dollars. Acceptability as a means of payment is essentially a matter for agreement between the parties involved. Where a transaction is subject to VAT, the transaction must be converted to sterling for tax purposes. Millions of pounds' worth of sterling banknotes in circulation are not legal tender, but that does not mean that they are illegal or of lesser value; their status is of "legal currency" (that is to say that their issue is approved by the British parliament) and they are backed up by Bank of England securities. Bank of England notes are the only banknotes that are legal tender in England and Wales. Scottish and Northern Irish banknotes are not legal tender anywhere, and Jersey, Guernsey and Manx banknotes are only legal tender in their respective jurisdictions. Although these banknotes are not legal tender in the UK, this does not mean that they are illegal under English law, and creditors and traders may accept them if they so choose. Traders may, on the other hand, choose not to accept banknotes as payment, as contract law across the United Kingdom allows parties not to engage in a transaction at the point of payment if they choose not to. In Scotland and Northern Ireland, no banknotes, not even those issued by local banks, are legal tender. They have a similar legal standing to cheques or debit cards, in that their acceptability as a means of payment is essentially a matter for agreement between the parties involved, although Scots law requires any reasonable offer for settlement of a debt to be accepted. Until 31 December 1984, the Bank of England issued £1 notes, and these notes did have legal tender status in Scotland and Northern Ireland while they existed. The Currency and Bank Notes Act 1954 defined Bank of England notes of less than £5 in value as legal tender in Scotland. Since the English £1 note was removed from circulation in 1988, this leaves a legal curiosity in Scots law whereby there is no paper legal tender in Scotland. HM Treasury has proposed extending legal tender status to Scottish banknotes. The proposal has been opposed by Scottish nationalists who believe it would reduce the independence of the Scottish banking sector. Most of the notes issued by the note-issuing banks in Scotland and Northern Ireland have to be backed by Bank of England notes held by the issuing bank. The combined size of these banknote issues is well over a billion pounds. To make it possible for the note-issuing banks to hold equivalent values in Bank of England notes, the Bank of England issues special notes with denominations of one million pounds ("Giants") and one hundred million pounds ("Titans") for internal use by the other banks. Banknotes are no longer redeemable in gold, and the Bank of England will only redeem sterling banknotes for more sterling banknotes or coins. The contemporary sterling is a fiat currency which is backed only by securities; in essence promissory notes from the Treasury that represent future income from the taxation of the population. Some economists term this "currency by trust", as sterling relies on the faith of the user rather than any physical specie.
Issuing banks and authorities
The following table lays out the various banks or authorities which are authorised to print pound sterling banknotes, organised by territory:
Bank of England notes
In 1921, the Bank of England gained a legal monopoly on the issue of banknotes in England and Wales, a process that started with the Bank Charter Act 1844 when the rights of other banks to issue notes was restricted. The bank issued its first banknotes in 1694, although before 1745 they were written for irregular amounts, rather than predefined multiples of a pound. It tended to be times of war, which put inflationary pressure on the British economy, that led to greater note issue. In 1759, during the Seven Years' War, when the lowest-value note issued by the Bank was £20, a £10 note was issued for the first time. In 1793, during the war with revolutionary France, the Bank issued the first £5 note. Four years later, £1 and £2 notes appeared, although not on a permanent basis. Notes did not become entirely machine-printed and payable to the bearer until 1855. At the start of the First World War, the government issued £1 and 10/– Treasury notes to replace the sovereign and half-sovereign gold coins. The first coloured banknotes were issued in 1928, and were also the first notes to be printed on both sides. The Second World War saw a reversal in the trend of warfare creating more notes: to combat forgery, higher denomination notes (some as high as £1,000) were removed from circulation. There are no Welsh banknotes in circulation; Bank of England notes are used throughout Wales. The last Welsh banknotes were withdrawn in 1908 upon the closure of the last Welsh bank, the North and South Wales Bank. An attempt was made in 1969 by a Welsh banker to revive Welsh banknotes, but the venture was short-lived and the notes did not enter general circulation, surviving today only as a collectors' curiosity. All Bank of England notes issued since Series C in 1960 through June 2024 depict Elizabeth II, who was monarch at the time, on the obverse side, in full view facing left; her image also appears as a hidden watermark, facing right; recent issues have the anti-photocopier security EURion constellation around. In September 2022, following the death of Elizabeth II, speculation arose as to when the Bank of England would begin replacing banknotes with her portrait on for ones with the portrait of Charles III. After the end of the mourning period, the Bank announced that the portrait of the King intended for use on its banknotes would be released by the end of 2022. New banknotes with the portrait of the King would circulate alongside existing banknotes with the image of the late Queen for an unspecified period. Images of the revised notes featuring a new portrait of the King, as well as his personal cypher, were released by the Bank of England on 20 December 2022, and entered circulation on 5 June 2024. The portrait of Charles III is based on a photograph taken when he was in his early 60s. The Bank of England has a set of criteria for choosing characters for banknotes – initially, it looks at who has previously featured, to allow for a reflection of the diversity of society. It does not accept fictional characters, or any living people with the exception of the reigning monarch, but instead aims for individuals that are both widely admired, and are considered to have made an important contribution to British society and culture. The final criterion is that the individual has an easily recognisable portrait available for use. This does not need to be a painting, as, up to October 2026, there have been two sculptures and two photographs used.
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